Navigating Dubai's unique property landscape Are you moving overseas and not sure whether you want to rent or buy? Don’t worry, you’re not alone. This is a pivotal decision during any international relocation, and we’ve been helping people make the decision that works best for them and their family for decades. Before delving into the specifics of each location in our series, it's essential to understand the overarching factors that influence this decision, regardless of where in the world you're headed. We've prepared a list of questions and considerations that you should be asking yourself regardless of where you're moving in the world. These should be the very first things you weigh up in your mind, before you make a decision about renting or buying in your new home. Remember too, that if you're moving for work, much of this is contingent on what your assignment contract stipulates about living expenses (if any): How long are you staying? Just a Pit Stop?: If you're only setting up camp for a short while – for example, a short-term assignment or secondment, renting might be your best bet. After all, it has a lower up-front cost. Here for the Long Haul?: Is it a permanent move, or maybe your employer has booked it in as a long-term assignment? Maybe buying's your game. Just remember, it's a commitment. What's the local housing scene like? The Money Talk: Different places, different rules. Get the lowdown on local market dynamics. Is it a buyer’s market, or are you better off renting? Can You Even Buy Here?: Dive into the do's and don'ts. Some countries have restrictions for foreign property owners. How liquid are your finances? Upfront and Ongoing Costs: Owning isn't just about the buying price. There are maintenance costs, taxes, and maybe homeowner association fees. Renting might be easier on the wallet, at least for now. Thinking of Another Move?: If there's another potential move in your future, think about how fast you can sell and get your money out. How fast do you adapt? Dive into the Deep End: Renting can be a quick way to get a feel for the local vibe, helping you adjust faster. Custom Space, Custom Pace: Owning means you get to shape your space. If leaving a personal touch is your thing, buying might be up your alley. Rent first, buy later? Best of Both Worlds: Sometimes, it's smart to complete your move and rent first. Get the lay of the land, then decide if buying's the move. Plus, it’s a two-step approach to settling down. Logistical hurdles Buying from Afar: It's doable to buy property overseas without visiting. But, like buying shoes without trying them on, there can be surprises. Do your research and if you can, maybe take a trip to see it first hand. Remember that "buying from afar" may involve a higher down payment and interest rate from the mortgage lender. The Dubai Housing Market Before you commit to any decision in Dubai, it’s important you understand the concept of “designated freehold areas”. In 2002, the Dubai government introduced legislation allowing foreigners to buy, sell, and lease properties in designated freehold areas. This means that a non-UAE national, whether they reside in Dubai or not, can own property in these zones with full property rights. Some of the popular freehold areas in Dubai are Palm Jumeirah, Dubai Marina, Jumeirah Lake Towers, and Downtown Dubai. You can find a complete list here. In non-freehold areas, foreigners can acquire properties through a long-term lease, often spanning 10 to 99 years. While you have the right to use and make modifications to the property during the lease term, the ownership reverts to the Emirati landowner once the lease expires. Remember there’s a lot of variation in cost between townhouses, apartments, and villas, so explore both your requirements and options extensively. According to Moneycorp, the average rental cost can range from around US $1,116 for a one-bedroom apartment outside the city center to close to US $3,500 for a three-bedroom apartment right near the center of Dubai. The average apartment price for buyers in Dubai is US $342 per square foot, according to the commercial property consultants, CBRE. As mentioned above, this varies significantly between Current trends As of 2023, The Dubai housing market is currently heating up, with house prices increasing 17% year-on-year (August). This was the tenth consecutive month of strong growth. International realtors, Knight Frank, stated that this was largely attributable to sustained demand, particularly from foreign buyers of villas. Rental prices are also increasing, up 19% year-on-year in the first half of 2023. Important things to remember in Dubai 1. The Rental Index The Dubai Land Department runs an excellent online resource called “The Rental Index”, providing up to date information about forecast price changes in rent. This is invaluable for overseas renters, allowing you to pre-empt the small minority of unscrupulous landlords who may arbitrarily raise prices. 2. Property Visa & Golden Visa Foreigners who invest in a property worth AED 1 million (US $272,000) are eligible for a multiple-entry property visa, valid for six months. However, it's not a work visa, meaning you can't work in the UAE with this visa. The much-vaunted “Golden Visa”, which you may have already read about, carries with it a requirement of purchasing a property worth AED 2 million (US $450,000 approximately) and will give you long-term residence without the need for a sponsor. Unlike the standard property visa, this gives you the right to work in the UAE too. 3. Registration Fee When buying a property in Dubai, a registration fee must be paid to the Dubai Land Department. This fee is typically 4% of the property's purchase price. This is similar to other land-tax levies, such as the U.K.’s “stamp duty”. What's the interest rate situation? Interest rates in the UAE are 4.7% for residents and 5.1% for non-residents (there’s a split in the UAE). The general trend here is upwards, as with much of the rest of the world. However, the interest rate hike at the beginning of 2023 did not seriously impact the housing market of the Emirates, in no small part because of the large number of cash buyers. The decision to rent or buy when moving to a city like Dubai is complex. It's not just about finances, but also your projected length of stay, adaptability, local market dynamics, and personal preferences. Dubai's unique property landscape, marked by its freehold and leasehold zones, adds another layer of consideration for potential foreign investors. With significant year-on-year growth in the housing market, understanding local trends and regulations becomes even more vital. It's worth noting that while buying might offer a sense of permanence and an investment opportunity, renting provides flexibility. Given the complexities and potential financial implications, it's paramount to consult with local real estate professionals, conduct thorough research, and make well-informed decisions. If you’re moving to Dubai, the UAE, or anywhere; we’re here to help. From finding a home to live in, to finding a school for your children, to taking care of your precious belongings as they move to your new home, Crown Relocations can be with you all the way. Get in touch with one of our experts today to start planning your move.